# How innovation and collaboration are evolving the fight against financial crime Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2021-09-28 Category: FINANCE Category URL: https://financedigest.com/category/finance Meta Title: Cracking Down on Money Laundering: Q&A with Global Meta Description: Discover how financial institutions can leverage technology and collaboration in the battle against money laundering and associated crimes with insights from URL: https://financedigest.com/how-innovation-and-collaboration-are-evolving-the-fight-against-financial-crimehtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/outlaws-hands-locked-in-handcuffs-isolated-on-black-sbi-301327026-1736837743538-compressed.jpg) _Q&A with **Andrew Davies,** Vice President, Global Market Strategy, Financial Crime Risk Management at Fiserv_ ![](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/picture1111-450x548-1736837743491-compressed.jpg) Although it sometimes can be overlooked as a serious crime, money laundering is a thorn in the side of financial institutions, businesses and regulators. Not only is money laundering a prevalent and pervasive issue in the financial sector, it can hide crimes that are far worse. Financial institutions, businesses and regulators have all been working together to improve [anti-money laundering](https://www.financedigest.com/anti-money-laundering-time-to-take-a-new-approach.html "ANTI-MONEY LAUNDERING: TIME TO TAKE A NEW APPROACH?") efforts, and new approaches to technology and collaboration are fuelling the effort. Andrew Davies, Vice President of Global Market Strategy, Financial Crime Risk [Management at Fiserv speaks to Finance](https://www.financedigest.com/how-parents-can-help-students-manage-their-finances.html "How Parents Can Help Students Manage their Finances") Digest about how financial institutions can leverage technology, data, and collaboration to aid in the fight against money laundering and associated crimes. **In a world where new [financial crimes](https://www.financedigest.com/financial-crime-is-the-chink-in-the-banks-armour.html "Financial crime is the chink in the banks’ armour") emerge every day, why does money laundering merit a focus?** While TV shows and movies can make money laundering seem glamourous, the predicate crimes that create the need for it are often particularly nefarious, including human trafficking and [arms dealing](https://www.financedigest.com/rathbones-snaps-up-investecs-uk-wealth-arm-in-all-share-deal.html "Rathbones snaps up Investec’s UK wealth arm in all-share deal"). And we aren’t doing enough to stop them. According to the United Nations, around [2-5 percent of global GDP](https://www.unodc.org/unodc/en/money-laundering/overview.html) is laundered through the financial system annually – that’s somewhere between $800 billion and $2 trillion  – yet it’s estimated that as an industry we only stop 0.1 or 0.2 percent of the money that’s laundered. Last year at the Financial Action Task Force ( [FATF](https://www.fatf-gafi.org/home/)) on money laundering’s plenary session, they created the slogan: “Stop money laundering, save lives”, and this captures the highest intent of AML. Simply put, if we can stop money laundering, we can stop the flow of ‘dirty’ money into the legitimate [financial system](https://www.financedigest.com/why-a-rules-management-system-can-untie-financial-services-hands.html "Why a rules management system can untie financial services’ hands"), making it much more difficult for criminals to carry out a broad range of crimes. **Tell us more about how the [financial industry is collaborating](https://www.financedigest.com/video-collaboration-is-pushing-the-boundaries-of-the-customer-experience-in-financial-services.html "Video Collaboration is pushing the boundaries of the customer experience in Financial Services") in the fight against money laundering.** There’s been a groundswell of interest and participation in collaborative efforts to fight [money laundering](https://www.financedigest.com/money-laundering-made-easy-by-uk-financial-system.html "Money laundering made easy by UK financial system"). This is happening through a trinity of vendors, [financial institutions](https://www.financedigest.com/the-future-of-financial-institutions-in-2023.html "The Future of Financial Institutions in 2023"), and regulators. What we’ve seen in the last 18 months is increased collaboration where the regulators are being more pragmatic about what they’re expecting from [financial institutions](https://www.financedigest.com/what-the-future-holds-for-financial-institutions-in-2023.html "What the Future Holds For Financial Institutions in 2023"), such as sharing information and leveraging different types of technology, practices that have a material impact on reducing the sum of money laundered through the system. This is a very encouraging trend. If we share more information, we have more data, and that drives more effective use of [analytics to stop](https://www.financedigest.com/how-p2p-analytics-can-help-you-stop-fraudsters-getting-rich-at-your-expense.html "How P2P analytics can help you stop fraudsters getting rich at your expense") money laundering. So that’s using, for example, machine learning (ML) and [artificial intelligence](https://www.financedigest.com/types-of-artificial-intelligence.html "artificial intelligence") (AI), and of course, the fuel that drives these technologies data. One [trend we’ve seen this past year has been in response to the increase in financial](https://www.financedigest.com/2016-financial-recruitment-trends.html "2016 FINANCIAL RECRUITMENT TRENDS") crime during the pandemic. More money stolen through online scams is being laundered through the financial system, and this has led several organisations, such as [RedCompass Labs](https://labs.redcompass.com/), to come together and compile typologies, algorithms, and red flags that financial institutions should look for as they try and detect money laundering. **How do AML** [processes benefit from automation?](https://www.financedigest.com/new-cloud-cfo-automates-the-manual-consolidation-process-for-group-finance-with-spreadsheets-connected-to-the-cloud.html "New Cloud CFO Automates the Manual Consolidation Process for Group Finance with Spreadsheets Connected to the Cloud") ML, AI and intelligent automation (IA) can be applied across the entire AML lifecycle, including onboarding, monitoring, [financial crime](https://www.financedigest.com/australia-financial-crimes-regulator-opens-investigation-into-britains-entain.html "Australia financial crimes regulator opens investigation into Britain’s Entain") detection, case management and reporting. A particular focus has been on the detection of unusual activity to prevent money laundering and [fraud and reduce](https://www.financedigest.com/the-importance-of-a-proactive-and-collaborative-approach-to-reducing-contactless-fraud.html "THE IMPORTANCE OF A PROACTIVE AND COLLABORATIVE APPROACH TO REDUCING CONTACTLESS FRAUD") risk. ML-based models are being used to identify red flags in data related to [bank transactions and customer](https://www.financedigest.com/christmas-debt-hangovers-how-banks-can-help-customers.html "CHRISTMAS DEBT HANGOVERS: HOW BANKS CAN HELP CUSTOMERS") behaviour, and those same algorithms and techniques can be used for risk modelling. For example, as a new customer is onboarded, what is the inherent [financial crime risk](https://www.financedigest.com/financial-risks-of-climate-change-overplayed-senior-hsbc-banker-says.html "Financial risks of climate change overplayed, senior HSBC banker says")? What indicators are there in their information that might show a [higher risk](https://www.financedigest.com/dollar-higher-on-risk-aversion-euro-revisits-parity.html "Dollar higher on risk aversion; euro revisits parity") of them being involved in money laundering or any criminal activity? This is evaluated during initial due diligence in [onboarding a new customer](https://www.financedigest.com/99-financial-firms-expect-benefit-open-banking-improved-customer-onboarding-main-driver-adoption.html "99% of financial firms expect to benefit from Open Banking, with improved customer onboarding the main driver of adoption"), but it’s also done on an ongoing basis. If your customer base includes [small businesses](https://www.financedigest.com/how-banks-will-evolve-to-support-small-business-owners.html "How banks will evolve to support small business owners"), the number of changes in control and ownership is likely high. So it is essential to [continue due diligence across](https://www.financedigest.com/workday-continues-momentum-across-europe.html "Workday continues momentum across Europe") the entire lifecycle. When it comes to detection, suspicious activity alerts can be combined with behavioural analysis from previous investigations to identify the alerts most likely to be connected to [money laundering](https://www.financedigest.com/working-with-both-human-ai-and-graph-technology-to-combat-money-laundering.html "Working with Both ‘Human’ AI and Graph Technology to Combat Money Laundering") activity, enabling analysts to prioritize investigations. **Is it possible for smaller, more regional institutions to deploy the same capabilities and realize the same benefits as the larger institutions?** That’s an interesting question that applies to mid-tier institutions too – smaller and mid-tier banks don’t necessarily have the same volume of [data that big](https://www.financedigest.com/hedge-funds-suffer-big-outflows-in-q2-data.html "Hedge funds suffer big outflows in Q2 – data") banks have. When it comes to ML, the [fuel for the technology](https://www.financedigest.com/honeywell-announces-new-ethanol-to-jet-fuel-technology.html "Honeywell announces new ethanol-to-jet fuel technology") is data, so this is where collaboration and access to shared learnings can play a big role. At Fiserv we have built a library of red [flags indicators that we see across the entire market](https://www.financedigest.com/puma-confirms-full-year-outlook-flags-market-volatility.html "Puma confirms full-year outlook, flags market volatility"), and we make that available to each and every one of our clients. Obviously, this sharing is subject to our clients’ permission, but the [benefit is significant](https://www.financedigest.com/thomson-reuters-report-reveals-risk-compliance-staff-expect-to-see-significant-benefits-from-artificial-intelligence-ai-and-distributed-ledger-technologies.html "Thomson Reuters Report Reveals Risk & Compliance Staff Expect to See Significant Benefits from Artificial Intelligence (AI) and Distributed Ledger Technologies"). It is important to share these typologies because criminals often take the path of least resistance. If they see a gap where an institution doesn’t have the same capability, they’ll try to take advantage of that. So we can share data insights through our [technology via a library of red flags to an institution of any size](https://www.financedigest.com/all-shapes-and-sizes-how-to-match-your-technology-to-your-finances.html "All shapes and sizes: How to match your technology to your finances"), and everyone can learn from each other. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---